Ann: Acquisition of Interest in GOM - Investor Presentation, page-17

First 17 Last

Share
Profile

Follow
afterlife

824 Posts.

202

16/11/23

11:58

Post #: 70936356
Share

Originally posted by mrposhman: ↑

Depends on how you value it. Sure it looks a bit of a premium (I'll come back to that in a bit), but 1 of the biggest criticisms of the KAR valuation has been their exposure to 1 producing asset and their lack of diversification.

KAR's valuation before this was around about $37,500 per producing barrel and the acquisition is at around $58,000-$66,000 so it seems more expensive, however if you compare to our peers in Australia, lets look at BPT, their current market cap is broadly based on $72,000 per each producing barrel and the expectation of these GOM assets are that their operating profit levels will be much higher than that of BPT due to the nature of the heavy upfront expenditure related to deepwater developments, ie. they have high upfront capital commitments, but as flow rates are generally much better they can generate better returns through low ongoing operating costs which is what we see here with only $5.70 operating cost per barrel.

I also like the higher exposure through higher WI% in the exploration blocks (especially as they also include a carry on exploration costs).

Whilst the upfront valuations of this specific acquisition look to be on the high side, there is huge upside with the exploration areas, but the big area of improvement for KAR shareholders is closing the valuation metric differences that we see with BPT and others, and thats what this acquisition is designed to do.

Ie. BPT generated 50k boepd production in the Sept quarter and are valued at $3.6bn ($4.1bn EV). This will take KAR's production to close to 45k boepd and our market cap (based on the TERP) will be around $1.8bn (based on $2.30 - as per presentation) and EV of around $2.15bn. Thats still a significant valuation gap with BPT which would expect to start to be closed IMO.

I'm pleased with this acquisition and will likely take up all my rights in the EO and will also apply for shortfall shares.

The one area that KAR will be on the lookout for going forward, is continuing to expand on growing their 2P asset base which will include taking Neon to FID and also adding reserves with the expansion opportunities at Who Dat, though I wouldn't count out a look to add assets that require development from smaller companies without access to funding. KAR will be generating significant cashflows going forward and with relatively low capex levels, have significant opportunities going forward in what they can use that cashflow for (including starting up a dividend programme - which for me should start from this transitional 6 months to the new financial year).

Expand

taken from the BPT's recent AGM presentation on the 14th of Nov, two days ago

BPT FY23 Financial Results production 19.5MMboe KAR Estimate for FY24 is around 13.5MMboe
BPT paid 4cps Div KAR No talk of a Div
BPT Revenue 1.6b, Ebitda 1.0b KAR remain to be seen

I reckon a better comparison can be established at the end of CY24 after all the dust has settled

KAR Price at posting: $2.15 Sentiment: None Disclosure: Held
2 Upvote

0 Great analysis

Reply

There are more pages in this discussion • 37 more messages in this thread...

First 17 Last

Add KAR (ASX) to my watchlist

(20min delay)
Last $1.79		Change -0.030(1.65%)		Mkt cap ! $1.434B

Open	High	Low	Value	Volume
$1.80	$1.82	$1.79	$9.834M	5.463M

Buyers (Bids)

No.	Vol.	Price($)
1	17291	$1.79

Sellers (Offers)

Price($)	Vol.	No.
$1.80	24326	3

View Market Depth

No.	Vol.	Price($)
1	17291	1.790
10	72153	1.785
17	123446	1.780
9	91170	1.775
12	64947	1.770

Price($)	Vol.	No.
1.795	5493	1
1.800	7793	2
1.805	70281	4
1.810	131780	4
1.815	63909	4

Last trade - 16.10pm 30/05/2024 (20 minute delay)


Last $1.79		Change -0.030 ( 1.86 %)
Open	High	Low	Volume
$1.80	$1.82	$1.79	1626595
Last updated 15.59pm 30/05/2024 ?

KAR (ASX) Chart

Ann: Acquisition of Interest in GOM - Investor Presentation, page-17

Featured News

It’s hard to imagine a world without a mining company called Anglo American

The Big Deal: Welcoming Warren Tredrea's words on the business of sport

Daily ASX Market Update: Materials drags market under - May 30, 2024

Sun Silver kicks off historical drill core assessment as US grant application underway

Daily ASX Market Close: Index slides as basketball fan makes $40 million bid for Perth Wildcats, May 30, 2024

Buyers (Bids)

Sellers (Offers)

Featured News

Ann: Acquisition of Interest in GOM - Investor Presentation, page-17

Featured News

Top Stories

It’s hard to imagine a world without a mining company called Anglo American

The Big Deal: Welcoming Warren Tredrea's words on the business of sport

Daily ASX Market Update: Materials drags market under - May 30, 2024

Sun Silver kicks off historical drill core assessment as US grant application underway

Daily ASX Market Close: Index slides as basketball fan makes $40 million bid for Perth Wildcats, May 30, 2024

Buyers (Bids)

Sellers (Offers)

Featured News